Plan administrators need to use full and fair review process to reasonably assess claims for benefits

A 2007 decision from the US 4th Circuit Court of Appeals that a plan administrator failed to use the standard of “full and fair” review resulted in its reversal of a District Court ruling that found in favor of Cooperative Benefit Administrators, Inc.’s (CBA) determination that a severely impaired employee could still work a sedentary job, despite clear and substantial evidence to the contrary.

Cooperative Benefits Administrators Focused on Claimant's Asthma

CBA, plan administrator for National Rural Electric Cooperative Association Long Term Disability Plan, had initially denied Callie Guthrie’s claim for long term disability benefits based on a diagnosis of occupational asthma, her primary complaint according to CBA, which rendered her capable of sedentary employment. By focusing only on her asthma, CBA referred her claim to only pulmonary specialists.

Guthrie, however, had other significant ailments that were causing her health to rapidly deteriorate. Her physician had placed CBA on notice of her prominent dermatological condition that was causing open sores and boils, as well as osteoarthritis, esophageal disease, and major depression, all of which placed her in a category that made her incapable of even minimal sedentary work.

Insurance Company Chose to Ignore Physician's Diagnosis

CBA and the District Court, apparently, only considered the pulmonologists’ reports who, while acknowledging Guthrie’s primary physician’s diagnoses and report, chose to conspicously ignore them. The District Court’s ruling granting summary judgment to CBA could only be based on what it considered to be a reasonable determination by CBA.

The appellate court assessed the plan administrator’s use of the standard of “full and fair review,” which under ERISA requires that plan administrators use to determine if the administrator’s decision is based on a “deliberate, principled reasoning process,” and “supported by substantial evidence.” Under this standard, CBA fell woefully short in its reasoning process.

Essentially, CBA unreasonably chose to consider the findings of Guthrie’s doctor as inapplicable to her ability to engage in any type of occupation. According to the appellate court, Guthrie’s claim for long term benefits was clearly based on her full array of ailments that unequivocally rendered her incapable of working without any evidence or opinions contradicting or challenging that finding. 

The court ruled that by not considering all of Guthrie’s ailments, CBA denied her a full and fair review as required under ERISA. The lesson in this decision is that a plan administrator can, and will, consider or ignore any evidence it chooses in denying benefits to participants. Claimants need to retain skilled and experienced ERISA lawyers to fight for their rights and to ensure that any determination regarding benefits is based on a full and fair review of all applicable factors.

 

Read The Court Findings Here

Guthrie v. Nat'l Rural Elec. Coop. Ass'n Long-Term Disability Plan, 509 F.3d 644 (4th Cir. 2007)

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

CALLIE D. GUTHRIE, 
Plaintiff-Appellant, 
v. 
NATIONAL RURAL ELECTRIC COOPERATIVE 
ASSOCIATION LONG-TERM DISABILITY PLAN; 
COOPERATIVE BENEFIT ADMINISTRATORS, INCORPORATED, 
Defendants-Appellees.

GREGORY, Circuit Judge:

Callie D. Guthrie ("Guthrie") was denied long-term disability benefits ("LTD benefits") by her employee benefit plan. She brought suit against Cooperative Benefit Administrators, Inc. ("CBA") under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B). CBA moved for summary judgment. The District Court granted CBA's motion for summary judgment and denied Guthrie's motion for summary judgment, holding that no genuine issue of fact supported Guthrie's disability claim. 

Because we find that CBA failed to consider all of Guthrie's medical ailments in denying her claim for disability benefits, we reverse and remand.

Put simply, CBA denied Guthrie's claim because she was physically and mentally capable of working a sedentary job. The crux of Guthrie's appeal is that CBA denied her a "full and fair review" by [Slip. Op. 651] ignoring compelling evidence that she was limited by a number of physical and mental ailments in addition to occupational asthma.

She claims that CBA improperly relied on pulmonologists who did not adequately address her other health conditions, in violation of ERISA provisions, which require an administrator to "consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment." 29 C.F.R. § 2560.503-1(h)(3)(iii). Guthrie also argues there is ample evidence supporting her disability claim based on other conditions that CBA never considered. CBA contends that Guthrie's primary complaint was occupational asthma, and therefore it was not inappropriate to refer her claims to pulmonary specialists. More significantly, CBA asserts that Guthrie's other ailments were not the basis for her claim for LTD benefits. The district court found that all of Guthrie's arguments lacked merit and held that there was substantial evidence to deny her disability claim.

ERISA requires that plan administrators give plan participant appeals a "full and fair review" so that an administrator's decision is "the result of a deliberate, principled reasoning process" and "supported by substantial evidence." 29 U.S.C. § 1332(a); Weaver v. Phoenix Home Life Mut. Ins. Co., 99 F.2d 154, 157 (4th Cir. 1993); Stup v. Unum Life Ins. Co., 390 F.3d 301, 307 (4th Cir. 2004).

Employing this standard, we find CBA's denial of benefits was unreasonable. Although initially CBA had substantial evidence that Guthrie could perform sedentary work, by 2003 CBA was on notice that Guthrie's other ailments were causing her health to deteriorate. On May 12, 2003, Dr. Goodman noted that Guthrie's medical problems were very significant and that she was suffering from "very prominent anxiety," depression, "is frequently tearful," and that "in some ways [Guthrie's] dermatological lesions were making her unemployable." (J.A. 77.) By the time CBA commenced its investigation on January 22, 2004, into whether Guthrie's LTD benefits would continue, she was already diagnosed by a clinical social worker, albeit not a psychologist, as suffering from major depression and anxiety. In response to the investigation, Dr. Goodman completed an attending physician statement on January 28, 2004. In the statement, he indicated that Guthrie's asthma, nerves, skin lesions, and arthritis all placed her in a Class 5 physical impairment category; that is, Guthrie's functional capacity was severely limited and she was incapable of minimal sedentary activity. Dr. Goodman also noted that she had developed very prominent anxiety symptoms. On February 27, 2004, Dr. Goodman reported that Guthrie's skin rash was so terrible that she had small infected boils in some areas. [Slip. Op. 652] Despite these reports, CBA denied Guthrie LTD benefits on May 24, 2004.

And even after Dr. Goodman, in support of Guthrie's appeal, stated that her osteoarthritis, severe dermatitis, asthma with an occupational component, esophageal disease, hyperlipidemia, and hypertension rendered her disabled from any occupation, CBA claimed that her medical condition did not prevent her from returning to other gainful employment. In so deciding, CBA relied on Drs. Sonne's and Pearl's reports. Both pulmonologists found that Guthrie was not disabled based on her occupational asthma. Although Dr. Pearl noted that Guthrie had "multiple other problems," neither doctor addressed her other ailments.

Given that CBA was aware of the extent to which Guthrie's other ailments were disabling, we cannot conclude that CBA's reliance on the opinions of pulmonologists was reasonable. Under the circumstances, CBA should have referred Guthrie's appeal to an internist or primary care physician to assess her other ailments. Without question, CBA honed in on Guthrie's pulmonary issues, which effectively resulted in denying her claim based on occupational asthma alone. The record makes clear that on appeal the basis for Guthrie's claim for LTD benefits included far more than her occupational asthma. Moreover, the record is bereft of any evidence demonstrating that Guthrie's other ailments were not disabling. Thus, CBA's failure to consider Guthrie's constellation of medical issues denied her a full and fair review and, consequently, its decision to deny benefits was not based on substantial evidence.

Ben Glass
Ben Glass is a nationally recognized Virginia injury, medical malpractice, and long-term disability attorney